Slide 3 - Oracle Supply Chain Management Cloud: Order to Cash
Slide notes
Hello, my name is Kopal. Welcome to the Release Training for the Oracle Fusion Pricing product for Release 11. In this session, I’ll introduce you to this new product and its capabilities for Pricing Administration.
Notes
Slide 4 - Agenda
Slide notes
I’ll start with an overview of the Oracle Fusion Pricing and then discuss Pricing Administration capabilities, followed by two demonstrations. Finally, I will cover implementation considerations.
Notes
Slide 5 - Introducing Oracle Fusion Pricing
Slide notes
Oracle Fusion Pricing will enable companies to effectively plan their pricing policies and rules using targeted pricing strategies. By segmenting customers with like buying behavior and grouping specific pricing rules to a strategy, companies can meet their business and revenue objectives. Customers will be able to manage their pricing and shipping rules for products and services in Oracle Fusion Pricing. These rules will be executed in a highly performant and customized pricing processes to meet the business needs and will leverage best practices pricing processes.
In today’s presentation, I will primarily focus on the administration for pricing strategies, pricing rules, and shipping rules.
Notes
Slide 6 - Pricing Administration
Slide notes
With the Oracle Fusion Pricing, companies can implement their specific pricing processes through a set of administrative entities and a configurable pricing engine. These key entities include pricing strategies, pricing rules, and shipping rules. You can plan your pricing strategies for customers or segments based on the business targets and objectives. Oracle Fusion Pricing then lets you set up pricing rules based on a pricing strategy. Prices can be set based on a value or cost plus scenarios. Discounts rules can be applied to an order, and shipping charges are created. The various rules work together through pricing execution for pricing an order. For this session, I will focus on the setups for pricing strategies, pricing rules, and shipping rules.
There will be other training sessions that cover the pricing setups and the pricing process setups.
Notes
Slide 7 - Customer Pricing Profiles
Slide notes
Let’s take a closer look at the features that enables a pricing strategy derivation. When an order is placed for a customer, the pricing engine evaluates the attributes from the customer profile and then determines which pricing segment the customer belongs in. From there, the pricing engine will derive a pricing strategy by evaluating the pricing segment and associated attributes of the transaction. For both the pricing segment and pricing strategy derivation, the rules are modeled using a matrix implementation and are configurable by you as per your business process. Once the pricing strategy is derived, the pricing engine can now execute rules for the pricing strategy.
A pricing administration user would start by setting up a customer profile that would let the company assign pricing attribute to their customers. Examples of these attributes are Revenue Potential, Customer Value, or Customer Size. These attributes come from an extensible lookup and hence are customizable based on the requirements. A customer’s pricing profile may change over time and are date effective. To understand how this would contribute to deriving the pricing strategy for an order, let’s consider the following example: An order entry clerk places an order for the customer Computer Service and Rentals. The Pricing Administrator has set up has set up a customer pricing profile for Computer Service and Rentals. The values in its current customer pricing profile are high revenue potential, high cost to serve, high customer value, a high customer rating, and a large customer size.
Notes
Slide 8 - Pricing Segments
Slide notes
Before we continue with our example of deriving a pricing strategy for Computer Service and Rentals, we need to understand Pricing Segments. A pricing segment is a grouping of customers that exhibit common sets of characteristics and buying behaviors. To set up a pricing segment, we have leveraged a concept called matrices. A matrix lets you dynamically specify a set of condition attributes. These attributes are defined in condition columns, which when evaluated and matched, will return the values in the result columns.
In this specific case of Pricing segments, the conditions are the customer attributes (from the Customer Pricing Profile) and the Pricing segment is the result. Based on the customer attributes, the pricing segment is identified. A customer can fall in different pricing segments depending on the matching condition attributes. Continuing with our example, the customer Computer Service and Rentals, with values of high revenue potential , high cost to serve, high customer value, a high customer rating, and a large customer size matches the first rule for the Corporate Pricing Segment. Blank values are considered wild cards, so this first rule will match.
Notes
Slide 9 - Pricing Strategy Assignments
Slide notes
Once the Pricing Segment is established, you can assign a pricing strategy to the pricing segment. Pricing Strategy is derived for the customer based on the strategy assignments. Like Pricing Segments, this also leverages matrices, where you can define the appropriate condition and result attributes. In the example shown, channel method and the pricing segment are the conditions that drive the pricing strategy. For the customer Computer Service and Rentals, if the channel method is Outside Sales or Direct, then the Pricing Strategy ‘Corporate Pricing Strategy’ will be selected.
Notes
Slide 10 - Manage Pricing Strategies
Slide notes
So now that we have derived the pricing strategy, the question is, what is a pricing strategy? A Pricing Strategy is the mechanism for delivering pricing policies. A Pricing Strategy identifies a specific business objective (for example, market penetration or maximizing margin) and the collection of prices and pricing policies to be applied to accomplish the business objective. It is the common container for all the pricing and shipping rules.
The pricing rules associated to strategy include price lists, cost lists, discount lists, shipping charge lists, and currency conversion lists. All the rules and the strategy associations are date effective. You can associate multiple pricing rules to a strategy and the rules are picked and applied based on the precedence, with the lowest precedence number selected first at runtime.
Notes
Slide 11 - Price Lists
Slide notes
So far, we have seen what a pricing strategy is and how it is derived with the pricing administration setups. Now let’s take a look at the feature of Price Lists. On a price list, you can define a collection of prices for items or services for a specific period of time. These prices are now called ‘Pricing Charges’ or ‘Charges.’ Four different types of price lists are supported:
• Segment Price List allows user to define prices for a pricing segment and is typically the price list used for transactions.
• On the GSA Price List, you can define prices for Government Services Administration customers.
• The prices on a Ceiling Price List capture the highest price for an item.
• The prices on a Floor Price List capture the lowest price for an item.
Oracle Fusion Pricing supports one time and recurring charges. A one-time charge is the charge against an item paid once by the customer when buying the item. Recurring charge is what customer pays for an item periodically, say a monthly or quarterly charge. For example, a cell phone may have a onetime sale price of $445 and a monthly recurring charge of $15 for the service.
Through the import and Export feature, you can move your price list data between instances.
Notes
Slide 12 - Price Lists - Charges
Slide notes
Price List allows the user to define charges for different types of items (standard items, services, configurations) and at different item levels such as items, product category, or for all items. In the example shown here, for item AS54888, there is a Sale Charge (for a one time, sale price) of $2500 starting from 1/1/2009. Oracle Fusion Pricing provides capability to calculate base list price in two ways through the calculation method of Price or Cost. Pricing based on cost leverages setups from Cost Lists. You can define multiple charges for an item for a given time period.
Two types of adjustments are supported in the price list. These are tier-based adjustments or attribute based adjustments. If these adjustments are applied, they will be applied after the base list price calculation. So, if there is a $100 tier or attribute adjustment applied, then the list price will be $2400.
Notes
Slide 13 - Price Lists – Tier Adjustments
Slide notes
Oracle Fusion Pricing provides the flexibility to define tier based adjustment on a price list based on the ordered item quantity or the extended order amount within the order. These tier adjustments will qualify based on the line or on lines for the entire transaction, and are applied after the base list price calculation. Multiple adjustments types are supported when definition the tier rules. These are discount amount, discount percent, markup amount, markup percent, and price override. In the example shown, a $50 per unit adjustment is applied if the order quantity is from 1-10, a $100 per unit adjustment is applied if the quantity is from 11-50, and a $200 per unit adjustment is applied if the quantity on the order is greater than 50.
You will need to specify the adjustment basis for any percentage based adjustment (either discount or markup), so that the pricing engine knows exactly how to calculate the adjustment.
Notes
Slide 14 - Price List – Attribute Adjustments
Slide notes
Pricing Administration user can also choose to define attribute based rules based on multiple dimensions. These adjustments are applied on top of the base list price for the specified charge defined on the price list. Attribute based adjustment offer the capabilities to price products based on the attributes from the transaction at runtime. For example, the pricing may differ for specific customers ordering from different sales scenarios. Then, on a price list, you can define attribute pricing rules with the conditions of Customer and Sales Channel. In this example, the base list price for the sale charge is $1000. With attribute based adjustments, if the customer is Computer Service and Rentals, then the price will be $900. If the customer is General Technologies and the Sales Channel is Indirect Sales, then an adjustment of 30% off of the base list price will be applied. If the customer is Computer Service and Rentals and the Sales Channel is Direct, then a 15% adjustment will be applied.
For the current release though transaction item attributes are not supported, but this can be extended.
Notes
Slide 15 - Price List - Configurable Models
Slide notes
Let’s now look into how user can define prices for a configuration model. The price for a configured item can be defined using the price list where user can define charges for the root item and each component item in the model structure. At execution runtime, the charges from the root item and each component are rolled up so there is a calculated rollup charge for each distinct charge definition. Tier or attribute based adjustments are supported at the root item level.
The price list supports multiple views for the ease of setting up and viewing pricing for the model structure. With the aid of hierarchical views, you can expand the structure tree to review charges defined at individual levels and understand how they contributes to the model's price. The entire structure can also be seen using a flat summary view where the user can define charges of the model and its components together.
Notes
Slide 16 - Discount Lists
Slide notes
With Oracle Fusion Pricing, you can set-up different type of discounts for items or for all items. These can range from simple amount based or percentage based discounts, such as a discount of 5% off all items, to volume based discounts, or discounts based on a set of attributes. An example of an attribute-based discount rule is a customer ordering from the northwest region would receive a discount of 10%, while a customer from the southeast region will receive a discount of 13%. The three types of discount rules that are supported are based on simple discounts, tier-based, or attribute-based discounts. User can define discounts, markups or price overrides using discount list. Discount list leverages the same feature to offer discounts on top of the list price to arrive at the net price.
Multiple adjustment types are supported on the discount rules. They are discount amount, discount percent, markup amount, markup percent, or price override. On discounts list, the discounts are defined based on the price type, charge type, and charge subtype combination and applied based on the given price type, charge type, and charge subtype combination of the charge on the order line.
Notes
Slide 17 - Discount Lists - Configurable Models
Slide notes
Users can define discounts for configurable models on a discount lists. Discount rules can be defined at multiple levels -the root item, components or for the entire configuration. When defining a discount on the root item, you can choose if the discounts will be applicable to the root item’s charge or the rollup charge for the configuration. Although the rollup charge is not defined on the price list, it is the aggregated calculation for the entire configuration for each distinct charge. Tier and attribute-based adjustments are supported only at the root item level. Similar to price lists, you can manage the component level discount rules through the hierarchical and summary views.
In the example shown here, there is a discount rule applied for the component KB18761.
Notes
Slide 18 - Cost Lists
Slide notes
In a cost list, pricing administrators can create and manage costs for items and services for a pricing charge. For a pricing charge, there are two supported cost calculation types of fixed amount or a percentage (such as a percentage of list price). Costs can be defined to be used in cost-plus pricing, but additional costs can be captured in calculating margin. You can capture one or multiple costs at a pricing charge level.
Here the first example that uses the fixed amount calculation in cost plus pricing. For item AS54888, the cost captured is for the Cost of Goods Sold for the sale charge. This cost of $50 can be used for Cost plus pricing. On the price list for item AS54888, if there is a pricing rule which uses the calculation method of Cost, then the pricing engine will get the cost of $50 and mark it up appropriately. So if there is a 100% markup of cost, then the base list price on the price list will be $100.
Notes
Slide 19 - Shipping Charge Lists
Slide notes
You can define the rules to create shipping charges such as freight, duty, insurance, and handling on a shipping charge list. The charges are defined for one or more items based on a specific shipping method. Both standard and configured items are supported, but note that the shipping charges for configured items are created only at the root item.
The user interface on the shipping charge list leverages a mass create feature to create the rules. For different ship methods, multiple items, and different types for shipping charges the shipping rules are defined in one go. Then the charges and dates can be edited as per the business requirements, saving the user time and effort. In the example, multiple charges (duty and freight) have been created for the item AS54888, based on the selection of two shipping methods.
Notes
Slide 20 - Currency Conversion Lists
Slide notes
Currency Conversion Lists enable companies to do business in multiple currencies while maintaining prices or adjustments in a single currency. You can establish one or more currency conversion lists for each pricing strategy. Multiple conversion types can be supported for a given currency conversion, and additional markups or markdowns are supported.
Notes
Slide 21 - Oracle Fusion Pricing